Estate Planning for Pet Owners

The widowed, childless millionaire leaving his entire estate to a Pekingese and the wealthy woman disinheriting her children in favor of a Persian cat are largely the stuff of fiction. On the rare occasion that someone actually leaves a fortune to a household pet, controversy often ensues. Leona Helmsley, for example, famously left $12 million to her Maltese. The dog received so many death threats that private security officers were hired to protect the animal. Two of Helmsley’s grandchildren, who had received nothing, filed suit. Ultimately, the dog’s share of Helmsley’s assets was reduced to $2 million, and the grandchildren awarded about $6 million.

Posted on November 21, 2017

Leaving millions of dollars for the care of an animal is rare enough that large pet trusts make the news: Gene Roddenberry’s widow left $4 million in trust to care for her dogs, with another $1 million earmarked to hire a caretaker for them, and Oprah Winfrey has reportedly set up a $30 million trust for the benefit of her five dogs.

While these extreme examples are outside the norm, it is not unusual for an estate plan to include reasonable provisions for the care of a beloved pet. More than 50% of New Jersey households include at least one pet. The most common scenario involves a single person living alone with one or more pets and concerned about what will happen to those pets after he or she passes away.

New Jersey Law Regarding Pet Trusts

Historically, U.S. courts were not receptive to bequests to pets. However, with the significant growth in pet ownership and the changing role of domestic animals in households and families, the law has evolved to accommodate the growing desire of pet owners to provide for their animals. Since 2001, New Jersey law has specifically allowed for trusts created to support the care of one or more domestic animals. A trust created for the care of a pet is administered in much the same way as a trust created for human beneficiaries:

  • A trustee or administrator is designated by the grantor or appointed by the court to ensure that principle and interest are expended as directed in the trust documents
  • The trustee may not convert the funds to his or her own benefit, or to any purpose other than for the benefit of the animal or animals the trust was created to support
  • Upon termination of the trust, remaining assets are to be distributed in accordance with the terms of the trust

A trust for the benefit of one or more domestic animals terminates after 21 years, or upon the death of the last of the animals named in the trust documents, whichever comes first. If the trust instrument makes no provision for the distribution of any remaining assets, those assets are transferred to grantor’s estate.

Limitation on Trusts for the Benefit of Domestic Animals

The New Jersey legislature created a means by which pet owners could ensure that their animals’ future care was secure if those pets outlived them. However, the legislature also included a provision to ensure that pet trusts were not abused or used as a means of diverting assets from heirs.

The court has the authority to reduce the assets dedicated to such a trust, if it determines that the amount placed in the trust substantially exceeds the amount necessary to provide for the designated care of the animal or animals. If the court sees fit to make such a reduction, the excess assets are distributed just as assets would be on termination of the trust: according to the terms of the trust document if such provision has been made, and to the grantor’s estate if the trust document contains no direction.

A Comprehensive Estate Plan is Multi-Faceted

Not everyone owns a pet, and not all pet owners opt to provide for their animals in such a formal manner. However, the increasing popularity of pet trusts is a good example of the wide range of issues to be considered when creating a comprehensive estate plan. Whether or not domestic animals are on your list of estate planning concerns, consulting with an experienced estate planning lawyer can be the best way to ensure that your plan thoroughly addresses your goals.

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